The State Of Social Advertising: How Human Capital, Technology, Education, And Data Deliver ROI
An Interactive White Paper By Andrew Torba, CEO of Kuhcoon.com
Hello,
My name is Andrew Torba. Over the past five years I’ve worked with hundreds of brands from around the world helping them learn to navigate the ever-evolving landscape of digital marketing. In this interactive white paper I hope to help you do the same. If you have a question throughout the paper please feel free to leave a comment anywhere on the page.
I’m passionate about helping brands learn to leverage the most cost-effective and powerful marketing channels on the planet. For the first time in history businesses have an opportunity to build real relationships with customers from around the world in the palm of their hand, and that’s something to be excited about.
After reading this guide you should walk away with an understanding of paid media advertising on the social web, learn to execute a scientific approach to paid media advertising optimization, and have a glimpse into the current state and future of social advertising from my point of view.
If you were hoping for a white paper filled with industry jargon and fluff, I’ll have to apologize in advance. I’m taking a unique approach to this paper by telling a set of stories. Each story will highlight the current state of social advertising, why it’s important, and how to take a scientific approach to learning and improving results.
Andrew Torba is a writer and entrepreneur. Andrew Co-Founded Kuhcoon in 2011 as a junior at the University of Scranton. In 2012 he was named the NEPA Business Journal’s Top 20 Under 40. His writing has been featured by The Huffington Post, VICE, Lifehacker, and Medium. Kuhcoon is the leading Facebook Ads management and optimization app trusted by over 6,000 Facebook Advertisers in 80 countries worldwide. Kuhcoon’s optimization technology programmatically improves the performance of Facebook Ad campaigns to cut costs and increase conversions using the power of big data.
Is Your Company Leveraging Social Media Advertising? It Should Be.
Social media advertising is in an embryonic state. Over the next decade advertisers will be allocating more of their budget to social ad spend in favor of lower costs, targeted mobile placement, and higher conversions.
In the last five years I’ve talked with thousands of people about social media advertising. It’s amazing to see the disparity in opinion between business owners, marketers, and consumers. The cool thing about my position is that I am all three of those things: business owner, marketer, and consumer; so I have an interesting all-inclusive perspective on social advertising.
The problem with the projections above is that these numbers are based only on Facebook and Twitter’s ad revenue growth over the past few years. Not only does this chart forget to include Facebook’s recent growth, but it also doesn’t take the changing market landscape into perspective. Over the past several months Instagram,Pinterest, LinkedIn, and Foursquare have all announced ads products opening advertisers up to new audiences of hundreds of millions of consumers.
Facebook’s Q3 earnings call recently beat market estimates and the company continues to scale, with advertising leading the way in revenue growth as more brands discover the power of Facebook’s ad products.
Some highlights:
-Facebook had their first $3 billion dollar quarter
-Mobile advertising revenue represented approximately 66% of advertising revenue for the third quarter of 2014, up from approximately 49% of advertising revenue in the third quarter of 2013.
-Revenue from advertising was $2.96 billion, a 64% increase from the same quarter last year.
-Mobile MAUs were 1.12 billion (with a B) as of September 30, 2014, an increase of 29% year-over-year.
The growth is amazing and the shift to mobile both in terms of placement by advertisers and use by 1/7th of the planet has been historical to watch unfold. Facebook continues to onboard tens of thousands of new advertisers on a weekly basis, including over 300,000 thousand in Q2 alone. Based on their current revenue trends I expect Q4 earnings to be a real showstopper with the holiday advertiser rush.
The next major push on Facebook’s ad tech product roadmap includes three major focus areas: video ads for brand marketers, their Audience Network (essentially an ad network outside of Facebook in third-party apps, but powered by Facebook’s data,) and pushing custom audience adoption (i.e. targeting people by email addresses or people who visit your website tracked through a conversion tracking pixel.)
When I ask consumers (aka normal people) about social advertising I usually get this as a typical response:
“Facebook ads are stupid and I don’t ever click on them.”
This was true a few years ago when advertising on Facebook was simply a side banner on the web that relatively no one clicked on. To the consumer these are still to this day “ads on Facebook,” but in reality that is only one of several ad products Facebook now offers. Everything changed when Facebook introduced Sponsored Stories in 2011, mobile News Feed advertising, and other ads products designed specifically for mobile such as mobile app install ads.
News Feed ads are now providing almost 50 times the clicks per ad compared to Facebook’s desktop right-hand side ads and 21 times the clicks of web retargeting ads. Not only that, but they are also delivering a higher ROI for a whopping 79% lower cost than web retargeting ads.
I think at this point there’s enough buzz for us all to understand the importance of mobile advertising.
We live in a two screen world where as consumers we check Facebook during TV commercials, increasingly rely on news from the web, and listen to music through streaming apps like Spotify and Pandora. If I were to place my marketing hat on, the way I see it mobile advertisers have one of three choices currently:
- Advertise with banner ads using services like iAds
- Advertise on streaming radio apps.
- Advertise in the social news feeds.
To me the clear and obvious choice as both a business owner and marketer is social ads. Mobile banner ads have small awkward placements typically found in free versions of popular mobile apps and games. The massive problem with these placements is that many app developers (not all) specifically design mobile UI’s to drive pseudo clicks on ads within their app, thereby driving revenue. That’s fantastic for the app developer, but for the advertiser it provides a weak form of ROI measurement.
When I show consumers Facebook “ads” on my phone in the News Feed today, many of them don’t even realize that they are being advertised to. You’d be surprised at how many people were shocked when I explained that the article about health and fitness in their News Feed was an “ad” promoted by a fitness company and that they were paying to be in their News Feed.
That’s the beauty of Facebook ads, there will always be a grey area between brands that are directly advertising and brands that are telling a story. The brands that tell a story on social will win, providing value and narrative to the community without directly pushing a product or service all the time.
This doesn’t mean that marketers can’t successfully utilize social ads to create product awareness, drive referral traffic to their website, provide rockstar customer service, and ultimately drive sales. The great thing about social ads is you can do all of these things at once, generating value beyond the clicks and conversions by building community and creating relationships with real customers. You can’t create a relationship with a banner ad.
As a consumer, I continually find value in targeted Facebook ads. Specifically, I have installed well over a dozen apps directly through discovering them in my News Feed.
There’s no avoiding it, if advertisers have targeted high quality content the consumer is going to notice it. Not only that, but unlike other forms of advertising consumers can directly chat with these brands and have a conversation with them from the palm of their hand. If your company isn’t utilizing social media advertising yet, it should be. Take the time to do some research and experiment with different social ads products, because they are here to stay.
What Would Don Draper Think of Facebook Ads?
Don Draper would have a field day with Facebook Ads.
Very few businesses realize the massive power and potential of advertising properly on Facebook. Many smaller brands have a bitter taste in their mouth about the continual “drop in organic reach,” which should otherwise be referred to as free advertising. Imagine telling Don Draper that he could reach thousands of brand advocates without spending a penny, what would he think of organic reach? The truth is brands should be thanking Facebook for the years of free exposure and branded web real estate to build real relationships with customers.
Not every business has the ability to make a significant investment in paid media advertising, especially struggling small businesses and startups. I get that. The thing is with Facebook they don’t need to. Facebook provides the platform and massive audience to promote anything: your business, your event, your non-profit, and even yourself. It’s the most cost-effective, targeted form of advertising on the planet.
The reality is: any FREE organic reach is awesome. On a network with a billion people(that’s roughly 1/7th of earth’s population by the way), 25 million brands, and 24/7/365 content distribution in News Feeds, any free exposure is fantastic and by all means a miracle.
Where else can you take a photo of your product, post it online, and instantly have existing customers and their friends (aka potential customers) be exposed to your business for free? Try asking your local newspaper for some free “organic” exposure of your business. Let me know how that works out for you.
Then there are the brands who claim that Facebook Ads don’t work. They run one ad, don’t see instant sales, and quit. This isn’t how marketing and advertising work. They focus on vanity metrics such as how many likes their Page has, posting silly cat memes and begging for people to share it with friends, and to top it off they don’t respond to customers who engage with their content.
This isn’t Facebook’s fault, it’s just garbage marketing.
Many brands jump into Facebook advertising with no clear objectives. Managing paid media on Facebook isn’t a “set it and forget it” form of marketing. It takes time to create compelling, visual content. It takes time to create multiple ad campaigns targeting multiple target audiences with multiple creatives. It takes time to monitor these ads like a hawk to make sure they are spending and converting the way you want them to.
Our brains don’t like all of this work. Few people have an understanding of managing paid media properly on Facebook, or any medium for that matter. It’s really no different from designing and executing any other marketing plan. Treat it like a science experiment.
Write your copy.
Design your creative.
Understand and select your target audience.
Allocate your spend.
Test, test, test.
Discover what works.
Reallocate your spend.
The difference with paid media advertising on Facebook is that for the first time advertisers can test their ideas, assumptions, and market reaction in real-time with real customers. Here’s how this would go down at Sterling Cooper:
Don has two big ideas for a new campaign. He has the creative team design two campaigns to run on Facebook targeting the client’s target audience. Don sets a minimal budget to test both ideas and creates a three day campaign. Idea one kills it, driving traffic back to the client’s website. Idea two performs well, but nowhere near the range of idea one.
Don uses Facebook Ads as a scientific utility to test his ideas and assumptions immediately in a marketplace of real customers. He has the creative team design ten different images around idea one. He runs another three days of tests to determine which creative variation performs the best.
The cycle goes on and on, and if Don was smart he would test all of his assumptions at once with minimal spend to measure market responsiveness. He should test different demographic targets like location, age, gender, interest, and more. Eventually he nails it. He discovers that idea one, image six, and audience demographic four are the perfect combination. He collects the data from the campaigns and presents it to the client.
This may sound intimidating, but this is the path to discovering the true value and ROI of paid media on Facebook. Solid, strategic, scientific, smart, data-driven advertising.
Don’t blame Facebook for garbage marketing. Don’t blame Facebook for providing the most powerful cost-effective form of advertising on the planet. Don’t blame Facebook for a decrease in free advertising.
Focus instead on creating awesome valuable content, building relationships with customers, and finding your sweet spot with paid media.
It’s what Don Draper would do.
Bridging the Social Media Literacy Gap
Traditional media advertising models have been relatively consistent for decades. The print,radio, and OOH channels all offer access to consumers. Advertisers pay for exposure to these consumers.
Those were the days. When marketers and small business owners could easily understand the value of their efforts and have a tangible real-world understanding of how their money was being spent. The biggest issue was worrying about changing campaigns, not changing mediums. To quote Gary Vaynerchuk in his new book Jab,Jab, Jab, Right Hook:
“Forget Mad Men, and fuck Don Draper. He lived in an easy world where nothing changed for thirty years, where you could spend your whole career working to figure out how the print and television markets worked. This world, the one you and I live in, evolves every second, every day.”
Social media marketing is always evolving. New features, new looks, new platforms, and new users in your community are just some of the pressing challenges behind maintaining a social marketing strategy. No one, myself included, can ever be a social media “expert, ninja, guru,” or any other vanity buzzword. Working in social media marketing is a never-ending learning process that brings new challenges every single day. If you are not ready to learn, then you picked the wrong occupation.
According to a ComScore digital use study, 2012 U.S. Digital Future in Focus, social networking accounted for 16.6% of time spent online in 2011. This number is growing as more and more people have access to mobile devices and other technologies around the world. As the amount of time consumers spend using social media continues to climb, so too will the number of brands utilizing these channels to market themselves.
Right now there is a lot of noise on the web and no concrete educational structure that addresses the problem of social media literacy, especially for the fastest growing demographic of new social media users ages 55–64. Even more fascinating is the number of internet users ages 65 and older using social media has grown from 13% in 2009 to an amazing 43 percent in 2013.
I’m not saying everyone in these age demographics lacks an understanding of social media (my grandparents get around just fine), in fact there are many people of all ages who pretend to be <insert social media buzzword here>. What I am saying is there is a massive lack of understanding by people of all ages from around the world. As we all steadily become more “open and connected,” the evolving technological landscape makes it difficult for even the “experts” to keep up.
With this rise in social media use from users of all ages around the world comes the need for what I refer to as “functional social media literacy.” Traditional functional literacy is defined as the range of skills and competencies that enable individuals to live and work as human beings. I am taking this concept and applying it to the current need for social media literacy around the world. Social media is not only a new marketing medium, it’s a means of mass communication and personal data storage that make up precious moments of our lives. We all need to learn not only how to use these mediums, but also how to protect our priceless personal data and privacy.
The Millennial Generation is witnessing the birth of an entirely new industry with jobs emerging in social media brand management, marketing, and communications among others. Many older unemployed individuals are looking to social media for new job opportunities. Unfortunately both of these generations are lost in an abyss of technological jargon and platforms that have complicated learning curves.
I believe education, simplicity, and care are the only answers to this problem. I may not have all the answers myself, but I am willing to help those who are eager to learn. If you have an understanding of something and you see someone who needs help, you can solve this problem as well. Treat others with respect and understanding, no question is a “stupid question” when someone is willing to learn. Take the time to help others learn and it will go a long way towards closing the social media literacy gap.
It’s Time To Rethink Retargeting And Reconsider Your Middleman.
Facebook recently announced the rollout of their new cross-device reporting data. In layman’s terms what this means is advertisers who retarget customers or website visitors can now track ROI across multiple devices and mobile apps. This solves one of the most elusive problems faced by advertisers today: how do I track a customer who sees an ad on their mobile device, but who later buys the product from their desktop computer?
For advertisers who may not know what retargeted advertising is: retargeted ads keep track of visitors to your website by using something called a conversion pixel. This pixel recognizes the user when they visit other websites, including Facebook, and displays an ad to them based on their prior visit to your website.
Let me try to break down just how powerful and disruptive Facebook’s new cross-device conversion data really is. Traditionally when advertisers would want to retarget customers and website visitors, they would use a third-party provider powered by Facebook’s FBX exchange.
This structure of third-party provider+ FBX= retargeting was really the birth of retargeted advertising on Facebook. At first this was an exclusive club reserved only for advertisers who leveraged a third-party retargeting provider to run retargeted campaigns. At the time you could not actually create a retargeted campaign using Facebook’s native Ad Manager.
There’s a reason these third-party retargeting providers charge advertisers upfront for their campaigns and keep their pricing pages extremely vague.They charge a hidden margin of 15–35% of the advertiser’s budget and limit the amount of control and performance data advertisers receive on their campaign reports. Most advertisers don’t even realize the massive margin they are paying these third-party retargeting providers simply for placement and basic pixel conversion tracking, which is now offered for free on Facebook.
The reason many advertisers don’t recognize this marginalization is because it’s baked directly into the cost of their campaigns. For example, the performance data provided to the advertiser by the third-party retargeting company will display a CPM of $2.00, but in reality the true cost is between 15–35% less.
This all changed of course when Facebook introduced pixel conversion tracking ads and custom audience targeting. FBX ads differ from traditional advertisements on Facebook. They are limited in terms of placement and have seen mixed results when it comes to engagement. Many third-party retargeting companies are now making the shift to Facebook’s native ad platform products in order to place retargeted ads in both the desktop and mobile News Feeds. They also continue to charge massive margins hidden in plain sight from the advertiser.
Advertisers using the third-party retargeting providers should realize some big red flags:
- Up to one third of their budget is being marginalized by the retargeting provider and hidden in the price of their campaigns.
- These third-party retargeting providers do not utilize the advertiser’s personal Facebook Ads account to run these ads. The advertiser misses out on crucial information such as actions and true performance data from not having any control over the ads account used by the third-party provider. By not having access to the Facebook Ads data performance or control over an independent ads account, the advertiser also can not take advantage of any other Facebook Ads tools or optimization services. So for example if you wanted to use Kuhcoon to manage and optimize your retargeted campaigns from your mobile device, you wouldn’t be able to do so.
- Advertisers can use Facebook’s own conversion tracking pixel and custom audience builder to create these retargeted campaigns for free instead of losing out on up to a third of their monthly budget to marginalization from a third-party.
- The biggest problem with these third-party retargeting providers is that they can not connect an impression/click on mobile with a sale made from the desktop of the user. Facebook just solved this problem with cross-device reporting data and has given advertisers the tools to track this data for free.
- Facebook’s Audience Network ads are going to own mobile and outperform other mobile ad networks for one reason: data. Not only are their Audience Network ads more engaging, but they also have the added benefit of cross-device conversion tracking to their advantage. Again, leveraging the power of the Audience Network is something advertisers can do for free on Facebook. Twitter also recently integrated their own pixel tracking technology as well. So while an added benefit of third-party providers may be multi-channel retargeting, Facebook and other native platforms are taking the reigns back with their own powerful mobile ad networks and retargeting technology. Is managing these retargeting campaigns in one place really worth 15–35% of your ads budget?
As the market becomes more educated about the free benefits of the powerful conversion and retargeting tools native platforms offer, we will witness a rapid consolidation of the retargeting industry.
If you want to instantly save money on your retargeting campaigns, improve performance with other optimization tools, and control all of the true performance data on your own Facebook Ads account: it’s time to rethink your retargeting middleman.
Put this post to the test: create a retargeting campaign on your own Facebook Ads account and compare the results to those you see using a third-party retargeting provider.
Brought to you by Kuhcoon.com
